June 21, 2006

 

CBOT Corn Review on Tuesday: Mostly higher; deferred months lead way

 

 

Corn futures at the Chicago Board of Trade ended mostly higher Tuesday despite bearish weather forecasts, sources said.

 

July settled unchanged at US$2.29 3/4 per bushel and December rose 1/4 cent to US$2.56.

 

The near-term weather is bearish. There is no heat in the forecast and fairly widespread rain in the corn belt, said Vic Lespinasse of AG Edwards & Sons.

 

However, ideas that recent losses were overdone and due for a correction limited selling interest, sources said. There still needs to be a weather premium in this market, corn has a long growing season, and seasonally it should be going higher right now, Lespinasse added.

 

December corn has declined 30 cents from its early June high.

 

The deferred contracts settled higher on ideas the market needs higher prices to encourage additional acreage to meet the expected demand for ethanol, sources said.

 

During the next two days, a stationary front draped across the Plains and Midwest is expected to be the focus of several episodes of showers and thunderstorms, DTN Meteorologix Weather said. Rainfall of up to 1 1/2 inches is possible from central Iowa through northern Missouri by Thursday with additional rainfall expected west of the Mississippi River by week's end.

 

In the eastern U.S. Midwest, up to 1 inch of rain is predicted over the next several days, spreading from Wisconsin south to the Ohio Valley, DTN Meteorologix Weather said.

 

News of export sales to unknown destinations and Mexico provided some support with one trader noting a pick up in recent sales activity on the recent price declines.

 

A slight decline in weekly crop conditions was expected and had little impact, floor sources said.

 

Sixty-eight percent of the U.S. corn crop was in good-to-excellent condition, down two percentage points from last week.

 

On technical charts, December settled just above its 200-day moving average. December corn's 14-day relative strength index stands at 35.86.

 

Buyers on Tuesday included FC Stonnee, which bought 800 July. RJ O'Brien bought 500 July, Prudential Financial bought 400 December and Tenco bought 700 July.

 

Sellers Tuesday included Goldenberg-Hehmeyer, which sold 2,000 December. JP Morgan sold 1,500 July, RJ O'Brien sold 1,000 December, and Fimat sold 1,000 December and 400 July.

 

In options trading Fimat bought 4,000 December US$2.90 calls.

 

Overall commodity fund selling was estimated at 7,500 contracts.

 

Oat futures settled modestly higher as early fund buying of December while selling September supported prices sources said. Concerns about the wet weather in some of Canada's oat producing regions added support, floor sources noted. July oats settled 3/4 cent higher at US$1.96 1/2 and December oats rose 2 1/4 cents to US$1.96 3/4.

 

Ethanol futures ended mixed in light trading. The July contract rose 15 cents to US$4.23 per gallon with the August contract down 2 cents at US$3.28.